Sage today released new research revealing that small businesses could hold the key to closing Canada’s long-standing productivity gap—if supported by SME-first AI and digital policies.
The report, Canada’s Digital & AI Imperative: Closing the Productivity Gap and Driving SME Growth, shows that while digital adoption is now essential to business survival and growth, uneven access to technology and skills risks creating a two-speed economy that leaves smaller firms behind.
Research Overview
Conducted in collaboration with Strand Partners, the research surveyed over 2,000 SME leaders across Canada. It found that:
- Skills shortages are a growing concern: 41% of medium-sized firms cite a lack of internal expertise as a barrier to scaling digital adoption.
- Cost remains the top hurdle for small firms: 58% say affordability is the biggest barrier to digital transformation.
- Digitalization is mission-critical: 80% of SMEs say it’s essential for growth, and 82% say it’s vital for survival.
- AI adoption is accelerating: 51% of SMEs already use AI, with another 18% planning to adopt it within three years.
- Medium-sized firms are leading the charge: They’re investing nearly twice as much in AI as small firms and reporting significantly higher productivity gains.
- Digital investment pays off: SMEs adopting digital tools see an average 29% productivity boost in the first year, with every dollar invested returning up to $2.40 among digital leaders.
However, regional and sectoral divides persist:
- AI adoption rates range from 56% in Québec to just 28% in Northern Canada.
- Sectors like finance and tech lead the way, while agriculture and construction lag.
- Cost, skills shortages, and unclear ROI remain major barriers.
SME-First AI Policy Recommendations
Sage is urging policymakers to place SME adoption at the heart of Canada’s AI strategy, backed by targeted skills investment and sustained support frameworks. To secure long-term prosperity and global competitiveness, Canada must close its productivity gap through inclusive AI adoption. This means empowering SMEs across all sectors and regions to lead confidently in the digital economy, while ensuring alignment with evolving global standards.
To address the most pressing barriers, Sage recommends the following policy actions:
- Embed SME adoption at the core of national AI strategy
- Equip SMEs with practical AI skills and confidence
- Unlock AI investment through targeted tax breaks and grants
- Deliver trusted, context-specific guidance for SMEs
- Foster a whole-of-ecosystem approach, uniting federal and provincial governments, industry, academia, and community partners
- Accelerate e-invoicing and structured data adoption
Closing Canada’s productivity gap demands inclusive action. Sage urges policymakers to adopt SME-first AI policies grounded in the lived experience of small business leaders. By investing in access, skills, and infrastructure—and aligning globally—Canada can unlock the full potential of its entrepreneurial economy. These priorities reflect the realities of Canadian entrepreneurs and chart a path to inclusive, innovation-led growth. As we mark Small Business Month, Sage calls on all stakeholders to champion a digital economy where small businesses lead.
You can download the report here.
Related
This entry was posted on October 22, 2025 at 11:19 am and is filed under Commentary with tags Sage. You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
Small Business AI Adoption Is Rising, But ROI and Skills Gaps Threaten Progress: Sage
Sage today released new research revealing that small businesses could hold the key to closing Canada’s long-standing productivity gap—if supported by SME-first AI and digital policies.
The report, Canada’s Digital & AI Imperative: Closing the Productivity Gap and Driving SME Growth, shows that while digital adoption is now essential to business survival and growth, uneven access to technology and skills risks creating a two-speed economy that leaves smaller firms behind.
Research Overview
Conducted in collaboration with Strand Partners, the research surveyed over 2,000 SME leaders across Canada. It found that:
However, regional and sectoral divides persist:
SME-First AI Policy Recommendations
Sage is urging policymakers to place SME adoption at the heart of Canada’s AI strategy, backed by targeted skills investment and sustained support frameworks. To secure long-term prosperity and global competitiveness, Canada must close its productivity gap through inclusive AI adoption. This means empowering SMEs across all sectors and regions to lead confidently in the digital economy, while ensuring alignment with evolving global standards.
To address the most pressing barriers, Sage recommends the following policy actions:
Closing Canada’s productivity gap demands inclusive action. Sage urges policymakers to adopt SME-first AI policies grounded in the lived experience of small business leaders. By investing in access, skills, and infrastructure—and aligning globally—Canada can unlock the full potential of its entrepreneurial economy. These priorities reflect the realities of Canadian entrepreneurs and chart a path to inclusive, innovation-led growth. As we mark Small Business Month, Sage calls on all stakeholders to champion a digital economy where small businesses lead.
You can download the report here.
Share this:
Like this:
Related
This entry was posted on October 22, 2025 at 11:19 am and is filed under Commentary with tags Sage. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.